Automatic enrolment: more people and more contributions?

New legislation has been passed, which paves the way for automatic enrolment to apply to workers from a younger age and for pension contributions to be payable on a greater proportion of earnings. 

The Pensions (Extension of Automatic Enrolment) Act 2023 has received Royal Assent. Once fully in force, the Act will allow legislation to expand the automatic enrolment regime by:

1. Requiring younger jobholders to be automatically enrolled. At the moment, jobholders have to be aged at least 22 years old to be eligible for automatic enrolment. The Act makes provision for this age threshold to be lowered. The DWP’s 2017 automatic enrolment review contains a policy ambition to lower the age threshold to 18 years old.     
2. Increasing the proportion of earnings on which minimum pension contributions are based. Under the automatic enrolment regime, contributions do not need to be paid on earnings below a certain amount, which is currently £6,240. The Act makes provision for this threshold to be reduced or removed entirely, meaning that once a worker is eligible for automatic enrolment, contributions could be payable from the first penny of qualifying earnings.    

More legislation will be needed to effect these changes, and the DWP has confirmed it will consult on the implementation of the new measures.